"LAPD began investigating Lohan on January 23rd. The necklace was reportedly stolen from a Venice boutique. If the LA County DA’s office files charges it would be grand theft, which is a felony."

Police say the necklace is now in a police locker — classified as evidence. The District Attorney’s office will decide whether to pursue any charges.

UPDATED w/ new details 2:30 PM EST: The whole thing smells like a frame-up for cheap publicity as Lindsay has denied stealing the necklace. Lilo said the necklace was loaned to her and a stylist forgot to return it. But the jewelry store owner reportedly saw a photo of Lohan wearing the necklace online, triggering an internet search and the owner’s visit to LAPD.